Overview
The VAT regime for electronically supplied services was approved by Law 4/X/2021 (2022 State Budget) and entered into force on 1 January 2022.
This regime only applies to international e-commerce operations carried out by non-residents in Cape Verde provided that they are included in a list prepared by the Ministry of Finance. If a non-resident supplier is not on this list, they will not have to charge VAT on their supplies (under this regime) to consumers in Cape Verde.
This regime applies to international e-commerce operations, as defined below (see “Services in Scope”), whenever the consumer has their head office, permanent establishment or domicile in the national territory or when the payment originates in Cape Verde or is intermediated by a financial institution established therein.
Law 16/X/2022 of 30 December 2022 (2023 State Budget) introduced minor amendments, such as transferring the responsibility of publishing the list of main e-commerce operators and underlying responsibilities from the Ministry of Finance to the “government office responsible for the area of finance”, and republished the regime.
E-commerce operators appearing on the list must proceed with a simplified registration through the electronic page. In this regard, there are two different regimes applicable within the ESS regime:
- General regime: applicable to taxable persons who proceed with the simplified registration
- Subsidiary regime: applicable to the taxable persons who do not proceed with the registration
The VAT is due the moment the payment for the supply is authorised by the financial institution, at the VAT rate applicable (reduced or standard rate), if the taxable person is in the general regime or only at the standard rate of 15% if the taxable person is in the subsidiary regime. Currently, only a single rate of 15% is foreseen in the VAT legislation.
Release Date: April 2024
Key provisions applicable to VAT on ESS |
| Table 1 |
Services in scope |
For purposes of applying the ESS regime, the following operations constitute e-commerce supplies as long as they are carried out via an electronic platform, portal, or similar interface:
The regime only applies to remittances of up to CVE 10,000. Moreover, it does not apply to the supply of goods subject to excise duties. |
Registration and compliance |
Registration requirements under the ESS regime only apply to designated main e-commerce operators, regardless of whether their supplies are done under a B2B or B2C arrangement. In this regard, financial institutions provide the Tax Authorities with data on the highest-value payments made to suppliers of electronic services, which are then compiled into a list of entities for which simplified registration is mandatory. Provided that a non-resident supplier is included in this list, it is required to proceed with the registration until the end of June. Once registered for VAT under the ESS regime, nonresident companies are required to submit quarterly VAT returns in calendar quarters. The corresponding VAT payments must be made by the end of the month following the end of the VAT return period (quarter). |
Invoicing |
Non-resident suppliers providing electronically supplied services are required to issue invoices in accordance with VAT legislation requirements. Starting on 1 January 2024, the concept of “invoices issued in legal form”, granting the right to deduct input VAT, has been updated to cover invoices issued electronically. Moreover, while it is acceptable for non-resident suppliers to invoice customers/recipients in a foreign currency, the invoice should always contain an explicit reference to the Cape Verdean VAT, regardless of the currency in which it is denominated. |
VAT on costs
|
| The special VAT regime for e-commerce is silent regarding VAT recovery on incurred costs. Thus, the general regime foreseen in the VAT Code applies, and input VAT incurred in Cape Verde may be recovered on the quarterly VAT returns. |
Other considerations |
| While the ESS regime is in force, it has not come into effect as the relevant government office has not yet published the main list of e-commerce operators. |
Particulars |
Description |
Scope |
The regime applies to all taxable persons identified in the list of main e-commerce operators. It does not distinguish between the electronic supply of goods or services provided to individuals (B2C) and those provided to businesses (B2B). |
Liability to remit VAT |
By the supplier of the electronic service |
VAT rate |
15% |
Taxable value |
The price payable by the recipient of the supply |
Effective date |
1 January 2022 |
VAT registration threshold |
Not applicable |
Tax invoice |
Non-resident suppliers under the ESS regime are required to issue electronic tax invoices. |
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